Eurozone crisis to hit trade and shipping

By Lalin FERNANDOPULLE

The sovereign debt crisis in the Eurozone will affect trade and shipping in 2012 and 2013 said Aitken Spence Shipping Maritime Sri Lanka Chairman and CEO, Dr. Parakrama Dissanayake. He was addressing the seventh Southern Asia Ports, Logistics and Shipping 2012 Sri Lanka forum. He said that unless shipping capacity is managed, it will be difficult to restore rates to profitable levels.

Idle ships need to increase and there would be consolidation of shipping lines, mergers and acquisitions Dr. Dissanayke said.Shipping line experts have warned that freight rates will continue to rise if there is a disruption to the supply of oil in the Middle East.

Freight rates will continue to rise

Dr. Dissanayake said that with possible disruption of oil from Iran, bunker prices will remain volatile.

The World Bank called upon developing countries to prepare for shocks much more severe than in 2008. A spokesman for the Bank said that in the event of a major crisis, no country will be spared.

The Bank has reduced the growth forecast this year for developing countries to 5.4 percent from 6.2 percent and for developed countries to 1.4 percent from 2.7 percent and the Eurozone to 0.3 percent from 1.8 percent. Investments in developing countries have been cut by 45 percent in the second half last year.

According to the World Economic Outlook IMF, 2011 prospects would be bleak for many countries this year.

Economic growth in Germany will drop to 1.3 from 2.7, France 1.4 from 1.7, Italy 0.3 from 0.6, China 9.0 from 9.5, India 7.5 from 7.8, Latin America and the Caribbean 4.0 from, 4.5 and the Middle East and North Africa 3.6 from 4.0. Europe is on the brink of another crisis. Europe is in a lull, It's like being in the middle of a cyclone.

Alistair Darling, Former Chancellor of the Exchequer said Asian stocks dropped amidst global economic worries. In Japan Nikkei was 1.4 percent, in South Korea Kospi indicated1.4 percent, Hongkong's Hang Seng showed 0.7.

Dr. Dissanayake said that Asian stocks fell on sluggish USA jobs. The USA payroll grew by 120,000 in March 2012 far below the expected gain of 203,000. China's foreign trade growth is expected to slow to 10 percent from 22. 5 percent last year. Exports are expected to be grim while Asian exports are shifting to nearby markets.

The loss of the top 22 carriers exceeded $ 5.8 b last year, Maerskline exceeded $ 537 m , APL by $ 478 m, Coscon by $1, 393 m, Hanjin by $709m and Hyundai $ 623m.

Maerskline's profit during the first nine months last year dropped to $ five million.

The value of steel on water has also dropped.The value of 222 vessels of Maerskline dropped from US$ 12 billion a year ago to US$ 9.1 billion.

The value of MSC's fleet of 202 vessels dropped from $ 8.4b a year to $ 6.9b.Dr. Dissanayake said that freight rates have shot up since January this year. Hong Kong, US-West coast container rates have increased.

The Asia/Europe-Shanghai/Rotterdam is up 41 percent to $ 1335 per Feu.